Looking at Medigap supplements

Question from Annette: I'm looking at Medigap Supplements. Does anyone have experience with Transamerica Life Insurance or UHC through AARP? Those are the only 2 offered in my state that don't use Attained Age for premiums. I am specifically looking for info about how much their rates increase each year.

Answer: How Supplements are labeled, Age Attained, Issue Age, or Community Rated, has little or no bearing on which will be more or less expensive in 5 to 10 years. You should not make your choice based on that, nor familiarity with the name of the company or what a friend or family member has. None of those guarantee fewer or lower premium increases.

Profitability or loss is the key

The biggest determining factor in future rates is company profitability or loss year to year on each letter plan they offer, and rate increases must be approved by a state Insurance Commission with proof it's warranted. For example, everyone in Pennsylvania who has United Health Care Plan G, which is Community Rated, is in a pool. If that pool of business is profitable in their fiscal year, and they pay out 85 cents or less in claims for every dollar they collect in premiums, barring some crazy increase in reimbursement rates to providers by Medicare, there will not, and cannot, be any increase. If they pay out more than 85 cents, they can request and will likely be approved for a premium increase. The less profitable they are, the steeper the hike. Almost all Supplement companies in Pennsylvania lost money on most or all letter plans they offered in 2024. The result was some of the highest premium increases I've seen in my 18 years in the Medicare insurance industry for 2025.15% on United Healthcare which is the only Community rated company available in Western PA. We also have clients who had rate increases on Age Attained Supplements we are currently recommending or have in the past: 9.5% for Cigna, 12% for Medico, 18% for Aetna, and 20% for All State.

Attained Supplement premium increases should not scare anyone away

What many people get concerned about is the guaranteed rate increase that Age Attained Supplements have every year as one gets older. This doesn't concern us because it's very mild and doesn't start until age 68. From age 68 to 72 the Age Attained increase is $3 to $4, from 73 to 77 it's $4 to $6, from 78 to 82 it's $6 to $8 and 83 to 90, $10 to $12. Prior to 2024, on Plan N here in Pennsylvania, it was very common to go 3 years without any rate increase other than those because the companies we recommended most were often profitable.

What The Health Insurance Store looks for in a Supplement

What we want for our clients is a company whose starting rate is significantly less than the competition. We don't care if they're labeled Age Attained, Community Rate, or Issue Age. Companies with lower starting premiums tend to draw larger and healthier pools by enrolling not just those going on Medicare for the first time, who they must accept regardless of pre-existing conditions, but also healthy people who can pass medical underwriting and are leaving more expensive companies. A pool with a larger percentage of healthy members generally equates to fewer and lower premium increases.

As far as keeping rates down long term, choosing Plan N instead of G is the most effective way to assure longer term affordability on Supplements. Let me explain.

N instead of G

Currently the least expensive Plan N plan for a 65-year-old female is $86/month while G is $129. If there is a 12% rate increase per year on both N and G, which I think is quite realistic, the following will be the rates in 5 and 10 years from now: 2031 Plan N = 152 and Plan G = $228. In 2036 Plan N = $267 and Plan G $401. In just 5 years N will cost $912 less per year and in 10 years $1,656. And I believe I'm being conservative because Plan G, historically, has had more, and higher, rate increases than N.

Plan N differs from Plan G only in that there's a $20 co-pay for physicians' office visits and $50 for a trip to the Emergency Room. Be advised that Physical Therapy, blood work, X-rays, MRIs, etc., are NOT subject to a copay. Therefore, G offers no value to anyone who isn't going to see doctors, 20, 40, or 80 times per year! This is why we almost never recommend Plan G.

If you're currently on Plan G and can pass underwriting, switch to N now! You can do that all year round! Those who have been on Plan G for five to ten years, on average, save $1,000 to $3,000 a year immediately.

With questions or to make an appointment for a no cost consultation, give us a call, 724-603-3403, or reach out to me personally via email, [email protected].